US Property Tax for Foreign Investors in Miami: 2026 Guide

The United States offers no blanket tax exemption for foreign real estate investors. On the contrary, the US tax code imposes a layered set of obligations — federal income tax, state property tax, withholding requirements, and estate tax exposure — that can materially erode returns if not properly structured from the outset. Miami, as one of the most internationally active real estate markets in the US, attracts a disproportionate share of foreign capital, and understanding the applicable tax framework is essential for any cross-border investor. ## FIRPTA: Withholding on Sale Proceeds The Foreign Investment in Real Property Tax Act (FIRPTA) requires buyers of US real estate from foreign sellers to withhold 15% of the gross sale price and remit it to the Internal Revenue Service (IRS). This withholding applies regardless of whether the seller has made a profit. The withheld amount is credited against the seller's final US tax liability, and any excess is refunded after filing. For a property sold for $1 million, the buyer must withhold $150,000 at closing. Sellers who expect their actual tax liability to be lower can apply to the IRS for a withholding certificate to reduce the withholding amount, but this process takes several weeks and requires advance planning. ## Miami-Dade Property Tax Florida levies no state income tax, which is a significant advantage for investors. However, Miami-Dade County imposes an annual property tax of approximately 1.9% of the assessed value. For a condominium assessed at $800,000, the annual property tax bill is approximately $15,200. The assessed value is subject to the Save Our Homes cap for homestead properties, but investment properties do not qualify for this cap and are reassessed annually at market value. ## Federal Income Tax on Rental Income Foreign investors earning rental income from US property are subject to federal income tax. The default treatment is a 30% withholding tax on gross rental income, with no deductions. However, foreign investors may elect to treat rental income as "effectively connected income" (ECI), which subjects it to the standard graduated federal tax rates (up to 37%) but allows the deduction of expenses including mortgage interest, depreciation, repairs, management fees, and property tax. For most investors with significant expenses, the net election produces a lower effective tax rate than the 30% gross withholding. ## ITIN Requirement Foreign investors must obtain an Individual Taxpayer Identification Number (ITIN) from the IRS to file US tax returns and to receive refunds of withheld amounts. The ITIN application (Form W-7) requires certified copies of identity documents and can take six to ten weeks to process. Investors should obtain their ITIN before completing their first US real estate transaction. ## LLC Structure for Foreign Investors The most common ownership structure for foreign investors in Miami is a US Limited Liability Company (LLC). An LLC provides liability protection, separating the investor's personal assets from the property, and can be structured to achieve tax efficiency. A single-member LLC owned by a foreign individual is treated as a disregarded entity for US tax purposes, meaning the income flows directly to the owner's personal return. A multi-member LLC is treated as a partnership. Using a foreign holding company as the LLC member can introduce additional planning opportunities but also additional complexity. ## Estate Tax Exposure US estate tax represents one of the most significant risks for foreign investors. Non-US persons are subject to US estate tax on US-sited assets — including real estate — with an exemption of only $60,000, compared to $13.6 million for US citizens and residents. The top estate tax rate is 40%. On a $1 million Miami property held in personal name, the estate tax exposure at death could exceed $370,000. Holding property through a foreign corporation or a properly structured trust can eliminate this exposure, but the structure must be established before the investor's death to be effective. ## FinCEN and FBAR Reporting Foreign investors with US bank accounts exceeding $10,000 in aggregate value at any point during the year must file a FinCEN 114 (FBAR) report annually. Additionally, FinCEN's beneficial ownership reporting rules, which came into full effect in 2024, require most US LLCs to disclose their beneficial owners to FinCEN. Failure to comply carries civil penalties of up to $591 per day and criminal penalties for wilful violations. Explore verified investment opportunities in Miami: [View Miami Deals](/city/miami)